LIBYA: DRAWING BENEFITS FROM NEW TIES TO THE WEST

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06298269
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 4
• Document Creation Date: March 8, 2023
• Document Release Date: September 11, 2019
• Case Number: F-2018-02270
• Publication Date: September 3, 2004

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CENTRAL INTELLIGENCE AGENCY
3 September 2004
DIRECTORATE OF INTELLIGENCE
Libya: Drawing Benefits From
New Ties to the West
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In addition to his efforts with the United States,
Libyan Leader Mu'ammar Qadhafi is trying to build
influence with other Western countries' to end
Libya's pariah status and reintegrate Libya into the
international community. Qadhafi's acceptance of
responsibility for the 1988 Lockerbie bombing and
his December 2003 announcement that Libya would
abandon weapons of mass destruction (WMD) have
furthered his efforts to revive
ties to the West and to
remove longstanding obstacles to improved relations.
Libya's emphasis on improving its relations with
Western nations�particularly with Europe, which
Qadhafi sees as likely to be more open to relations
with Libya�appears to signal Tripoli's commitment
to a more pragmatic course over the long run, but this
course does not ensure that it will support US
policies.
Actively Fostering Ties to West
Since his public announcement renouncing WMD,
Qadhafi has supported an unprecedented number of
high-level exchanges with Western officials to
broaden relations and showcase Libya's reemergence
on the international scene.
� Libyan media gave high-profile coverage to the
British prime minister's visit in March�the first
such visit in 60 years.
This assessment when referring to "the West" includes
only Europe, Australia and Canada. (U)
3 September 2004
� Libyan Prime Minister Ghanem and Foreign
Minister Shalgam in May received Australia's
foreign minister in the highest-level diplomatic visit
between Tripoli and Canberra in 30 years
Libyan press reported in May that Australia plans to
increase diplomatic and trade exchanges and open
an embassy for the first time in 17 years.
� Qadhafi traveled to Brussels in April�his first visit
to Western Europe in 15 years�to meet and be
seen with Western leaders including the Belgian
prime minister and European Union (EU) President
Prodi
�
Qadhafi's son Saif al-Islam and Ghanem met
separately with French President Chirac this spring,
laying the
groundwork for a visit by Chirac to Libya sometime
this year.
� Libyan officials were pleased that Canada in March
planned to upgrade its diplomatic representation in
Tripoli to the ambassadorial level, according to
press.
Libya also hopes to extend its relations with the West
by participating in forums for multilateral dialogue,
economic cooperation, and training.
Libyan officials responded
positively to a conditional offer by the EU to join the
Barcelona Process�the Euro-Mediterranean
economic and political partnership.
� Libyan officials in July held a series of meetings to
discuss Tripoli's application to the World Trade
Organization
This report was prepared by the Office of Near Eastern and South Asian Analysis. Comments and
queries are welcome and may be directed to NESA
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� In February and March working-level relationships
were established on health, education, and
economic cooperation with British officials,
� The Belgian foreign ministry in February agreed to
provide unspecified training for Libyan diplomats,
according to press.
Working to Boost
Relationships With the West...
Tripoli's successes in improving its image and its
newfound resolve to pursue market-based economic
reforms have attracted increasing international
business interest. Foreign investment is still strongest
in the oil and gas sectors, but Libya's new open-for-
business image, actively cultivated by Prime Minister
Ghanem and other Libyan officials, has produced
new investments and strong expressions of Western
interest in the tourism, banking, and manufacturing
sectors.
� In March Libya's National Oil Company and the
energy firm Royal Dutch Shell signed an agreement
outlining Shell's future gas exploration projects in
Libya. According to press reports, the Shell
agreement is worth $200 million, with the potential
for a later partnership worth up to $1 billion.
� Libya's tourism ministry in April signed a $1.2
billion agreement with the Dutch leisure firm El
Dorado to construct ten tourism complexes in
eastern Libya, according to press reports. Libya's
first Western luxury hotel�the $135 million
Corinthia Bab Africa built by the Malta-based
Corinthia Group�opened in Tripoli last year,
according to press.
Turning Over a New Leaf on Economic Reform
While Libya's political outreach to the West has
helped attract foreign investment, Tripoli's concerted
effort over the past two years to promote market-
based reforms also has caught the attention of
international businesses that had written off Libya as
an investment destination.
� Libya's first move toward economic liberalization
occurred in late 2001 when Tripoli formally applied
for membership in the World Trade Organization,
according to press reports; the following year
Libya slashed tariffs by an average of 50 percent
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and unified its exchange rates. The government in
September 2003 started allowing private sector
merchants to import foodstuff commodities,
� Prime Minister Ghanem last year announced an
ambitious privatization program; one public
bottling plant has already been sold and 360 state
firms are to be opened to private investment in
stages, according to press reports. Tripoli is also
in the process of opening a stock exchange,
according to press reports, and a small but efficient
private banking sector is gradually emerging,
according to press.
... And Moving to Resolve Bilateral Irritants
Since his renunciation of WMD, Qadhafi has shown a
willingness to negotiate with the West to resolve
longstanding obstacles to improved relations. For
example, Libyan officials on 10 August agreed to pay
$35 million in compensation to the victims of the
1986 bombing of the La Belle Discotheque in Berlin,
according to press.
� Tripoli in April allowed Scotland Yard to interview
suspects involved in the 1984 death of British
police officer Yvonne Fletcher, who was fired upon
from the Libyan Embassy in London during an anti-
Libya protest, according to press.
�
Libya and France in January announced that Tripoli
would pay $1 million to the families of each victim
of the bombing of UTA Flight 772 in 1989,
Qadhafi's moves to remove impediments to Libya's
reintegration into the international community at
times are stalled by an apparent need to save face and
maintain an independent stance.
Implications for the United States (U)
Libya's emphasis on improving ties to Western
nations suggests Tripoli will pursue a more pragmatic
course over the long run. This emerging foreign
policy direction, however, does not ensure Libya's
unconditional support of US policies, and Tripoli may
disagree with Washington on contentious issues such
as on the Palestinians and Iraq.
� Pressure from the United States and its allies caused
Libya to withdraw its candidacy for a seat on the
UN Security Council in 2003, but Qadhafi may
hope that better ties with the West will bring
support for Libya's candidacy when the seat comes
open again in January 2006.
� Some Western countries may be more willing to
sell Libya conventional weapons and nonlethal
military supplies, particularly if Tripoli claims the
goods will be used to stem illegal emigration to
Europe. Italy has advocated lifting the EU arms
embargo on Libya so it can provide Zodiac-type
rubber boats, tents, and possibly night vision
equipment that Libya could use to control its
coastline, according to press.
� Libya's ties to Europe have expanded more rapidly
than those with the United States, giving European
companies an advantage over US firms seeking to
invest in Libya. Some French companies, for
example, have been quick to establish business ties
with the Libyan telecommunications industry.
� Libyan officials could seize on joint appearances
with European leaders or participation in
international forums to voice Tripoli's opposition to
the US presence in Iraq and its concerns regarding
expanding US influence in Africa.
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